For Wednesday October 09, 2013, We Recommend Shorting US Markets

October 8, 2013

Investment Recommendations:

Our automated forecast is predicting a decline for US markets! It is time to invest in leveraged index funds that grow when US markets decline. If you’re going to short US markets, take action ASAP, otherwise be sure to move to a risk off position with your investment portfolio.

Here are some inverse leveraged index funds if you want to short the market: SDS and SPXU, as well as others.

Technical Comments:

The S&P 500 dropped 1.23% on Tuesday with volume above Monday and stronger than the 30 day moving average, making Tuesday a strong-volume down-day. There have been 6 strong-volume down-days in the past 13 trading sessions with light volume days in between.

Subjective Comments:

It is difficult to guess how much of the market decline the past few days is from overall weakness caused by the slowed money supply growth as compared to other more immediate factors. The slowed money growth now following last years accelerated growth is the root-cause US markets are going to decline soon, but in the day-to-day movements of the market anything can cause fluctuations. The ongoing political government shutdown / debt ceiling circus in Washington D.C. has markets spooked. Based on Credit Default Swaps the market is estimating a 5.9% chance the US Treasury will default this month. Gallup’s economic confidence poll is collapsing with the worst 3-week plunge since the Lehman Brother’s bankruptcy in 2008. The S&P 500 has seen the largest 2-week decline in almost a year. It is very possible the resolution of the shutdown / debt ceiling issues will cause an upward spike in US markets. Regardless of when the short term issues occur and resolve themselves, US markets remain on the brink of a crash as explained by Austrian Business Cycle Theory. The root cause is the manipulation of the money supply caused by the Federal Reserve and commercial banks engaging in fractional reserve lending. These are the true root-causes of the coming crash despite whatever nonsense the financial press will report.

Speaking of the Federal Reserve, it appears the White House will announce the President’s nomination of Janet Yellen as the next Fed Head. It is extremely likely Mrs. Yellen will continue the money printing policies enacted under Fed Head Bernanke. She is likely to accelerate money printing as well, especially in reaction to a market crash. Money printing eventually results in price inflation, so price inflation hedges remain a good long term investment for part of your portfolio. If you have not yet invested in short positions and want to do so, we encourage you to do it tomorrow. Otherwise your best option for preserving your wealth right now is to avoid US markets altogether. Please let your friends and family know US markets are highly likely to crash this month and encourage them to take steps to protect their wealth.

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